Portugal: Tripartite commitment on labour market and collective bargaining measures

The process of building Portugal’s tripartite commitment for a mid-term concertation agreement, negotiated at the beginning of 2017, shows the challenges the social partners are facing in the new political cycle of organising tripartism given the government’s commitments to the left-wing parties, and the nation’s hopes of ending the period of austerity.

Background

The commitment negotiated between the socialist government and the social partners at the beginning of 2017 comprised three key components:

  • immediate measures on the minimum wage
  • joint action on the development of collective bargaining and modernisation of the labour market
  • the definition of general themes and goals, with a focus on competitiveness and social cohesion.

The title of the agreement itself expressed different levels of commitment and prospects for a future mid-term concertation agreement. The process of building this commitment showed the challenges the social partners face, the effect of the ruling Socialist Party’s commitments to the far left and the general desire to ‘turn the page on austerity’.

New challenges of tripartite concertation post-Troika intervention

The political context of tripartite concertation changed substantially when the Socialist Party (PS) gained power in November 2015. This was mainly because the PS needed support from the far-left parties, the Left Bloc (BE) and the Communist Party (PCP), as well as the Greens (PEV). The PS had separate parliamentary agreements with each of these parties, setting out the conditions for their support. The commitments included issues related to public sector employment relations, the labour market and employees’ rights (particularly on increasing the minimum wage and combating precarious work).

Another reason was contained in the XXI Government Programme (PDF), in which the PS aimed to relaunch the economy and employment, and

to sustain a consistent agenda of change in a strong commitment to resume the dynamism of social dialogue at all levels, from social concertation to collective bargaining at sectoral and company level, as opposed to the marginalisation and disrespect that characterised the last years.

The programme’s goals included:

  • updating the minimum wage to reach €600 per month in 2019
  • tackling precarious employment
  • combating the excessive use of short-term contracts, bogus self-employment and other atypical forms of work
  • reinforcing regulations and amending the rules of social security
  • promoting the extension of collective agreements to secure inclusiveness and overcome the breach of collective bargaining dynamics and coverage
  • combating individualisation of labour relations – in particular, on working-time arrangements, through referring their regulation to the sphere of collective bargaining
  • unlocking collective bargaining in the public sector on wage and working-time issues that have been unilaterally changed.

The programme was also explicit about tripartite concertation, expressing its commitment to two goals:

  • presenting a proposal at the Standing Committee for Social Concertation (CPCS) on an annual monthly increase in the minimum wage (from €530 per month in 2016 to €557 per month in 2017, €580 in 2018 and €600 in 2019)
  • submitting a medium-term strategy to foster competitiveness and social cohesion, connecting economic, taxation, income, employment and social protection policies to the CPCS, and negotiating it with the social partners.

Troubled process for commitment

The CPCS debate in the fourth quarter of 2016 on the minimum wage increase for 2017 and on labour market and collective bargaining reforms defined, in great measure, what would be a troubled process in achieving a mid-term strategic agreement.

There are four employer confederations represented at the CPCS. These are:

  • Confederation of Portuguese Business (CIP)
  • Confederation of Portuguese Farmers (CAP)
  • Portuguese Commerce and Services Confederation (CCP)
  • Confederation of Portuguese Tourism (CTP).

They began by opposing the government’s proposed 5% increase in the minimum wage for 2017 to €557 per month. They initially said they would agree to increasing the rate to €540, but only if employers’ social security contributions were reduced by 1%.

When the government insisted on fulfilling its agreements with the left-wing parties on the 5% increase, the employer confederations changed their strategy. They said they would accept a higher increase in the minimum wage – as well as a reduction in their social security contributions – if the government guaranteed to freeze current labour legislation on a wide range of subjects. In their proposal, published December 2016 regarding themes for a mid-term agreement (PDF), they set out that they wanted the agreement to maintain two key elements:

  • the current regime of labour relations within the labour law – in particular, in terms of types of hire, duration and organisation of working time, length of vacation and overtime payments
  • the collective bargaining legal framework, particularly regarding bargaining space, general principle of bargaining, validity, supervening and expiring of collective agreements.

This challenged the government’s plans to change rules allowing the individualisation of working time arrangements and to limit companies’ use of atypical forms of work. It was also in direct contrast to mounting pressure from the BE, PCP, and from Portugal’s largest union confederation, the General Confederation of the Portuguese Workers (CGTP,) to making sweeping changes to the regressive labour regulations launched by the centre-right coalition of the Social Democratic Party and People’s Party (PSD-CDS), under pressure from the Troika. The CGTP, in particular, campaigned for fully re-establishing the principle of favor laboratoris (favouring the protection of workers), and for reversing regulations that allow unilateral decisions regarding expiring of collective agreements. It was supported by left-wing parties, who submitted proposals on this to parliament, increasing the pressure.

However, despite tensions and difficulties, on 22 December 2016, the government and the social partners – with the exception of CGTP – reached an agreement, which would be signed on 17 January 2017: the Tripartite Commitment for a Mid-term Concertation Agreement (PDF).

From concrete deals to general goals and guidelines

The tripartite commitment included three components:

  • immediate measures related to the minimum wage
  • joint actions for the development of collective bargaining and modernisation of the labour market
  • the definition of general themes/goals for competitiveness and social cohesion.

The first component comprised two measures:

  • an increase of the minimum wage by 5% for 2017;
  • a reduction in employers’ contributions for social security, by 1.25 percentage points.

However, BE and PCP opposed this reduction and, on the basis of a Resolution approved on 25 January, the Portuguese parliament withdrew the Decree-Law (11-A/2017) that implemented the measure.

Facing with a potential loss of credibility and the risk of compromising the deal – since this measure was one of the main reasons for employers to sign the agreement – the government presented an alternative proposal. This was the progressive reduction of the special advance tax payment (Pagamento Especial por Conta), a measure benefiting SMEs in the Amendment to the Tripartite Commitment (PDF) signed on 3 February 2017.

The second component of the agreement included two main actions:

  • a bipartite commitment between trade union and employer confederations (extended also to the state as an employer) to commit their constituencies (unions, employer associations, single employers) not to unilaterally require the expiry of collective agreements for a period of 18 months (starting January 2017)
  • the goal of reaching another tripartite agreement during 2017, based on the discussion at the CPCS of the Green Paper on Labour Relations (PDF) published by the Ministry of Labour.

In line with this goal, the agreement expressed the commitment to discuss measures to :

  • combat labour market segmentation
  • revise the regime of a wage guarantee fund
  • revise the framework and legal deadlines on the extension of collective agreements.

The debate on this last issue at the CPCS resulted in a new resolution published in May 2017 speeding up the publication of extension ordinances, and replacing the criteria of representativeness by others that support the recovery of bargaining coverage and inclusiveness.

The third component of the tripartite commitment indicated priority themes for future debate with a focus on competitiveness and social cohesion, including the following:

  • financing the economy and capitalisation of companies
  • boosting the qualifications of adults and young people, and enhancing the participation of the social partners in vocational training
  • public investment in infrastructure to increase national competitiveness
  • energy costs and regulation
  • reduction of costs by reducing bureaucracy
  • improving the functioning of labour and economic justice
  • promoting fiscal stability and predictability, and making the system fairer and more competitive
  • strengthening the adequacy of social protection and securing the sustainability of social security
  • support for entrepreneurship
  • evaluating the regime of unemployment protection, particularly for independent workers.

Commentary

The question of how to balance commitments to the far-left parties and their parliamentary support, with social dialogue and ‘tripartism’ has proved to be hard for the new PS government, which had promised to ‘turn the page on austerity’. The coordination of the trajectory of the minimum wage and the new measure supporting SMEs appears to be a good example of organisation, despite the turbulence of the process.

The outcome of the tripartite agreement, in terms of facilitating the extension of collective agreements, also seems a positive step towards reviving collective bargaining. As for the bipartite agreement suspending temporary unilateral requirements for the expiry of collective agreements, it acknowledges implicitly the damage caused by the regulations on the frailty of collective agreements, but has the negative effect of postponing their revision – which remains a hot topic for employers, as does the proposal of fully resuming favor laboratoris.

Other issues where there is a clear agreement between the PS, left-wing parties and trade union confederations CGTP and the General Union of Workers (UGT), also face opposition from employer organisations. These include combating the individualisation of labour relations in working-time arrangements and penalising the abuse of short-term contracts. In these areas it seems that employer confederations remain entrenched, protecting rights secured under the shadow of the Troika.

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